RETIRED people pay a "staggering" amount in tax as the funds they rely on for income are targeted by the Treasury, one of Britain's biggest pension firms has warned.

Pensioners could be paying up to £51billion in to the Exchequer by April 2019

And experts fear the situation will get worse in the wake of new pension freedoms introduced earlier this year.

UK pensioners are already handing more than 30 per cent of their income to the taxman - effectively propping up the UK's economy.

The figure is an eye-watering £47.26billion per year collectively, or £6,500 from each retired household.

With that money they could buy a brand new car every year with £500 left over to cover the running costs, according to analysis of official figures by Prudential.

By April 2019 the Treasury expects pensioners will be contributing an extra £3billion to the Exchequer, taking the total tax take from those aged 65-plus to almost £51billion.

Steve Wilkie, managing director at retirement specialist Responsible Life, said: "Pensioners pay a staggering amount in tax. And it must feel like a double whammy as low interest rates hit their savings income.

"Retirement is meant to be a time for enjoying the fruits of a lifetime of work, not fretting about your finances."

The figures, from the 2012-13 tax year, show a year-on-year increase in the average income of a retired household of nearly £500 a year to £21,800.

But the amount they pay in tax has also increased, from £6,405 to £6,510, with indirect taxes such as VAT adding to the increased bill.

This looks set to rise due to pension freedoms launched in April. Over-55s will have easier access to their savings in contribution pension funds, much of which will be liable to tax.

The Treasury estimated after last year's Budget that the new rules would generate £320million in additional revenue during the 2015-16 tax year.

Pensioners pay a staggering amount in tax. And it must feel like a double whammy as low interest rates hit their savings income.

Steve Wilkie, managing director at Responsible Life

They will then bring in £600million between 2016-17 and £910million between 2017-18, rising to an additional £1.22billion by 2018-19.

Malcolm McLean, pension expert at Barnett Waddingham, said: "For many the ability to take more of their pension savings in cash will be irresistible. They should be able choose how to spend their own money. But many will be unaware of the tax implications of cashing in a pension pot in one go."

Cash taken out of a pension pot above the 25 per cent tax free lump sum is treated as taxable income and added to other income for the year. This can easily result in a higher rate bill of 40 per cent or 45 per cent.

Stan Russell, retirement income expert at Prudential, said: "Not all the income you receive in retirement will be yours to spend as you like.

"The tax burden has steadily been creeping up for pensioners because of indirect taxes such as VAT and fuel duty, which make up a greater proportion of their spend. Having to meet a higher tax bill is tricky for most people. It's even tougher on a fixed income in retirement."

A spokesperson for the Treasury said: "The Government is committed to supporting pensioners throughout their retirement.

"We introduced the most ground-breaking pension reforms for a century. Pensioners have a choice over how they use hard-earned savings.

"We've also helped them make the most of their money by reducing ­taxes for the lowest income savers, nearly trebling the cash ISA limit and launching popular government-backed savings pensioner bonds."